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I need to know the annual spend on marketing for medical devices in the U.S. and the projected growth rate over the next 3-5 years
Hello! Thanks for your question about the annual spend on marketing for medical devices in the U.S. and the projected growth rate of that spend in the next 3-5 years. The most successful sources I found to answer that question are Market Realist and Nature Biotechnology. In short, the annual amount spent on SG&A expense for medical devices is $15.48 billion, which includes marketing. Below I will explain the methodology used to reach that number, and a deep dive of my findings.
METHODOLOGY
To determine the annual spending on marketing for medical devices in the U.S. I first determined the size of the market for medical devices in the U.S. Then, I researched revenue for the market, and learned that the average selling, general and administrative expenses for medical devices companies is 36% of revenue. While the figures are not exact, I was then able to triangulate an approximate annual spend on marketing (as part of SG&A). To project future growth, I considered the overall trends in spending on medical devices, along with the current growth numbers for the market and assumed that the current growth rate would be maintained.
CURRENT MARKETING SPEND
SelectUSA reports that the U.S. market size is approximately $148 billion and is expected to top $155 billion this year. The U.S. market accounts for 43% of the global market for medical devices. Revenues for the market are at $43 billion. According to MarketRealist, medical device companies spend 36% of their revenue on SG&A. Marketing would be part of that expense, the approximate spend on marketing by these companies would be $15.48billion. Spending on marketing by medical device companies is similar that spent on marketing by traditional biopharma companies.
FUTURE MARKETING SPEND
Ibisworld indicates that the current growth rate of the medical device market is 2.6%, though suggests that future growth may be slightly higher because of an aging U.S. population. However, spending on medical devices has remained relatively flat for the last 15 years, at about 6%. Research from 2016 suggests that some medical device manufacturers are considering an increase to their marketing budgets. Assuming, conservatively, that the growth rate continues similarly, the revenue for medical device companies would be between $55.4 billion and $58.3 billion in 3-5 years. If SG&A spending continues to be 36% of revenues, then that spending would be between $19 billion and $21 billion annually.
INTEGRITY OF SOURCES
The two most helpful sources in doing this research were Ibisworld and MarketRealist. Ibisworld is a leading publisher, internationally, of business research since 1971. MarketRealist, founded in 2013, provides ETF data, analytics and subscriptions to its clients, which include Fortune 100 companies.
CONCLUSION
The approximate annual amount spent on SG&A expense for medical devices is $15.48 billion, which includes marketing. This amount is projected to grow in the next 3-5 years to between $19 billion and $21 billion annually.
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